1. With
regard to Defendants' request that the Court enter an
order that: (1) compels IBM to search for and produce
documents from 2004 pertaining to offers to sell a working
embodiment of United States Patent No. 7, 631, 346 (the
'"346 patent"); (2) grants leave to allow
Defendants to take additional depositions of the IBM
personnel involved with the Orange S.A. ("Orange")
project; (3) grants leave for third party discovery,
including of Orange; and (4) grants leave to supplement
Defendants' expert report to add and support the defenses
that this discovery elicits, (D.I. 272 at 2; see
also D.I. 283 at 2 (requesting that the Court
"compel IBM to respond to Defendants' discovery
requests [regarding the conception, reduction to practice,
and prior offers for sale of the invention of the '346
patent], including production of customer offers, agreements,
and communications, and grant leave to take discovery from
other sources if IBM claims that it no longer has
same")), the Court GRANTS-IN-PART Defendants'
request, as set out below.

2. As
to the issue of prior offers for sale of the invention of the
'346 patent, documents produced in the case demonstrate
that certain versions of a product relating to the invention
of the '346 patent were released to customers, including
Orange, in 2004. (See, e.g., D.I. 272 at 2; D.I. 283
at 1; D.I. 284 at 2) However, though Defendant priceline.com
LLC propounded an interrogatory requesting that IBM
"[d]escribe in detail all discussions, disclosures,
transactions, or other communications that occurred before
the filing date of any Patent-in-Suit concerning any proposed
or actual sale or offer to sell (regardless of whether for
commercial or experimental purposes). . . of any products,
systems, or services whose use was or may have been covered
by any claim of the Patents-in-Suit[, ]" (D.I. 283, ex.
4 at 6), [2] IBM's responses were silent as to the
'346 patent, (id., ex. 6 at 5-6, 10).
Furthermore, while Defendants propounded Requests for
Production of Documents seeking documents relating to this
topic, (id, ex. 5 at 9, 11 (Request Nos. 22, 23, 24,
36)), they assert that "IBM has not produced a single
document evidencing when the first offer was made or when it
was accepted" with respect to an embodiment of the
invention described in the '346 patent, (D.I. 272 at 2;
see also D.I. 283 at 1). Defendant priceline.com LLC
is entitled to a supplemental interrogatory response that
addresses the '346 patent, and Defendants are entitled to
any responsive documents pertaining to offers to sell an
embodiment of the invention in the '346 patent.
Accordingly, the Court ORDERS that by no later than
January 27, 2017, IBM shall provide
supplemental responses to these discovery requests, including
the production of any responsive documents relating to
customer offers, agreements, and communications that regard
offers for sale of the invention of the '346 patent.
Furthermore, Defendants may thereafter serve supplemental
expert reports limited to "add[ing] and supporting] the
defenses that this discovery elicits." (D.I. 272 at
2)[3]

3. As
to the issue of conception and reduction to practice of the
invention of the '346 patent, on May 31, 2016, IBM
produced an interrogatory response in which it stated that
"the inventions of the '346 Patent were conceived no
later than April of 2004 and reduced to practice no later
than April 1, 2005." (D.I. 284, ex. 40 at 88-89
(emphasis added)) IBM further explained in the response that,
inter alia, the "inventors' conception is
documented in at least design documents related to the Tivoli
Federated Identity Manager ('TFIM') product[, ]"
that the inventors' efforts in reducing the inventions of
the patent to practice led to the launch of the TFIM product,
and that the team working on the development of TFIM
"created PRPQ versions of the TFIM product to test its
functionality, including one PRPQ version on or near July
2004 and a second PRPQ version on or near December
2004." (Id. at 89) The response then further
cited to numerous documents, (id. at 89-91)
"which explained that PRPQ releases were distributed to
third-parties to solicit feedback[, ]" including to
Orange, (D.I. 284 at 2).[4] The Court agrees with IBM that its
response gave Defendants the "ability to
investigate" issues relating to conception and reduction
to practice, (Tr. at 25-26), which Defendants indeed explored
at the October 7, 2016 deposition of the '346
patent's lead inventor, Heather Hinton, (see,
e.g., D.I. 272, ex. 3 at 115-19; D.I. 284 at 3 (citing
to various sections of Ms. Hinton's deposition
transcript)).

4.
Defendants' primary complaint with respect to this issue
is that on November 22, 2016 (almost one month after the
October 25, 2016 fact discovery deadline in this case), IBM
filed a Response in an ongoing inter partes review
("IPR") proceeding regarding the '346 patent,
in which IBM further refined its position with respect to
reduction to practice of the invention of the '346
patent. In that Response, IBM stated that certain claims of
the '346 patent "were actually reduced to practice
no later than July 2004" at which time "a
pre-release version of TFIM . . . included the functionality
of the challenged claims-including code for runtime account
creation as claimed in the '346 patent." (D.I. 283,
ex. 3 at 3 (emphasis added)) Defendants assert that this
referenced source code was "first produced [by IBM] at
the close of fact discovery" and "[t]his specific
and new information never made it into IBM's
interrogatory responses pertaining to when, how, and by whom
the disclosed subject matter was allegedly conceived and
reduced to practice." (Id. at 1 (emphasis in
original)) This latest November 22, 2016 IPR disclosure did
further crystallize IBM's position as to reduction to
practice. But it is not clear how the disclosure justifies
Defendants' requested relief with regard to this topic
(such as Defendants' request for leave to allow
Defendants to take additional depositions of IBM personnel
involved with the Orange project and leave for third party
discovery of Orange). This is because IBM's prior
responses had similarly made clear that IBM had created
(including in July 2004) prerelease versions of TFIM relating
to the invention of the '346 patent, which IBM provided
to Orange (among others). For this reason, Defendants'
requests in this regard are DENIED.[5]

5.
Defendants make some additional broad requests with respect
to the issues of conception, reduction to practice, and prior
offers for sale of the invention of the '346 patent.
These include Defendants' request for leave to take
discovery from other sources if IBM claims that it no longer
has documents relating to offers for sale, or their request
that the trial be postponed if the additional discovery
processes granted to them cannot be completed prior to the
filing of dispositive motions. (D.I. 272 at 2; D.I. 283 at 2)
These requests are either premature or not warranted at this
time. Should Defendants feel there is a basis to renew these
requests following their having obtained the above-permitted
discovery, they may do so at that time.

6. With
regard to Defendants' request with respect to United
States Patent No. 5, 961, 601 (the '"601
patent"), for leave to assert four new invalidity
theories that they did not reference in their preliminary
election of prior art, (D.I. 272 at 2-3), the Court
GRANTS-IN-PART that request. The Court agrees with Plaintiffs
that this is a request to modify the Scheduling Order
pursuant to Federal Rule of Civil Procedure 16(b),
(see D.I. 275 at 3), for which Defendants must make
a showing of good cause.[6]See Paoli v. Stetser, Civil
Action No. 12-66-GMS-CJB, 2013 WL 2154393, at *2 (D. Del. May
16, 2013); Venetec Int'l, Inc. v. Nexus Med,
LLC,541 F.Supp.2d 612, 618 (D. Del. 2008). Whether Rule
16(b)'s good cause requirement is met depends on the
diligence of the party seeking modification, rather than on
prejudice to the non-moving party. Paoli, 2013 WL
2154393, at *2; Venetec Int'l, Inc., 541
F.Supp.2d at 618.

7.
Defendants focused their argument in their briefs almost
exclusively on one of their new invalidity theories: their
request to narrow a previously-asserted obviousness theory
based on the prior art reference "HTML and CGI
Unleashed" ("Unleashed") and another reference
("Danish"), to an anticipatory theory based on
Unleashed alone. (D.I. 276 at 2) Defendants argue that good
cause exists for this modification because IBM's
Preliminary Infringement Contentions did not focus on certain
limitations (the "identifying" limitation and the
"recursively embedding" limitation) of the claims
of the '601 patent, and that only as the case progressed
were Defendants able to piece together IBM's infringement
theory as to these claim limitations (based on IBM's
discovery requests, IBM's claim construction positions,
and IBM's discovery responses). (D.I. 283 at 2; Tr. at
39-41) This led to Defendants' decision to elevate
Unleashed to an anticipatory reference, one that Defendants
claim "mirror[s] IBM's apparent theory." (D.I.
283 at 2; see also Tr. at 39-41) In other words,
Defendants suggest that if IBM's Preliminary Infringement
Contentions had been clearer as to the infringement position
IBM was taking with respect to these limitations, then
Defendants would have been able to earlier assert an
invalidity theory based on "Unleashed" alone.

8. The
Court agrees that Defendants have established good cause to
be permitted to press a theory of anticipation based solely
on the Unleashed reference. In doing so, the Court agrees
with Defendants that Plaintiffs initial contentions were
vague as to how the above-referenced limitations were met by
the Accused Instrumentalities, (D.I. 283, ex. 10 at 8-11),
and were only meaningfully fleshed out later during the
Markman process, (see, e.g., D.I. 199 at
135-40), and thereafter. In turn, the Court can understand
why Defendants, though diligent, would not have earlier been
in a position to identify this particular prior art theory as
potentially sufficient to render the relevant claims invalid.
(D.I. 283 at 2)

9.
Furthermore, although prejudice is not a factor explicitly
considered in the "good cause" analysis, it is
still worth noting that the Court's decision here should
not prejudice IBM.[7] For one, it is not as if Defendants seek
to modify their election of prior art to add Unleashed as an
entirely newly-disclosed reference-rather, the reference has
been known to IBM for some time. On June 8, 2016, for
example, Defendants disclosed Unleashed in their Preliminary
Election of Asserted Prior Art, (D.I. 271, ex. 3 at 26), and
on July 29, 2016, Defendants served their Third Supplemental
Preliminary Invalidity Contentions in which they provided an
anticipatory mapping of Unleashed, (D.I. 283, ex.
14).[8]
On September 27, 2016, Defendants notified IBM that they
wished to promote Unleashed to an anticipatory reference
(providing a corresponding chart), (D.I. 272, ex. 6), and on
October 25, 2016, IBM supplemented its interrogatory answers,
in order to detail its view as to why Unleashed does not,
inter alia, anticipate the '601 patent, (D.I.
276, ex. 1 at 152-54). Moreover, the only specific example of
prejudice that IBM points to is that Defendants are now
relying on Unleashed's source code as a central part of
their theory, and "IBM can no longer take discovery as
to how that source code functioned at the time of the
invention or whether it was in fact available back in
1996." (D.I. 275 at 3) But Defendants' production in
July 2016 directed IBM to pages of the Unleashed textbook
that "disclose [] specific CGI program code to run on a
server and perform functions[.]" (D.I. 283, ex. 14 at 7;
see also Id. at 10-11, 13) And so it is not clear on
this record why, prior to the October 25, 2016 discovery
deadline, IBM was unable to take any discovery with respect
to at least those portions of the source code referenced
in the textbook. Nor is it clear why IBM waited until
six weeks after it was served with the Unleashed anticipatory
theory to object, (D.I. 272 at 3; D.I. 276 at 2); had it done
so earlier, perhaps there could have been room to adjust the
schedule to allow for whatever discovery it needed with
respect to this portion of the source code.

10.
There is one aspect of Defendants' anticipatory theory
with respect to Unleashed, however, that may be problematic.
IBM asserts that "Defendants produced a source code that
allegedly was related to the 'Unleashed' reference on
November 15, 2016, weeks after the close of discovery"
and that "Defendants' expert is relying heavily on
that untimely produced source code." (D.I. 271 at 3);
see also Fed. R. Civ. P. 16(f)(1)(C). The parties
dispute whether the content of this disclosure merely
reflects "an electronic reproduction of what is printed
on the cited pages" of the Unleashed reference, as
Defendants contend, (D.I. 276 at 3; see also Tr. at
43-44), or whether "the source code Defendants produced
contains more than the text in the previously produced text
book[, ]" as IBM argues, (IBM's Discovery Dispute
Hearing Slides at 2; Tr. at 49, 55; see also D.I.
284 at 3). If what was produced amounts solely to the former,
then Defendants may rely on it at trial; if what was produced
(or some portion of it) amounts to the latter, then even
Defendants are not suggesting that they should be permitted
to later rely on it. The Court does not have enough
information on this record to assess which party is right.
Accordingly, by no later than January 20,
2017, the parties shall provide a joint letter of no
more than four (4) single-spaced pages, in which: (1) IBM
shall set out its view as to what content, if any, contained
on the late-produced Unleashed source code CD goes beyond
what is printed in the textbook; and (2) Defendants shall set
out their response to the contrary. And aside from the narrow
issue of whether Defendants' modified prior art theory
may include reference to certain source code content on this
CD, the Court GRANTS Defendants' request to modify their
election of prior art with respect to the '601 patent to
rely on Unleashed as an anticipatory reference, but DENIES
the request as to the other three theories at
issue.[9] Defendants should, by no later than
January 20, 2017, serve on Plaintiff a
revised final election of prior art that identifies no more
than seven prior art theories for this patent and that, with
the exception of the permitted inclusion of the Unleashed
anticipation theory, lists only theories earlier disclosed in
their preliminary election of prior art.[10]

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.
With regard to Defendants&#39; request for a court order
compelling IBM to produce a comprehensive privilege log,
(D.I. 272 at 3-4), and with regard to IBM&#39;s request for a
court order compelling Defendants to produce a privilege log
of documents that were withheld or redacted on grounds of
privilege relating to any analysis performed by or for
Defendant priceline.com LLC concerning infringement,
validity, or enforceability of the patents-in-suit, (D.I. 271
at 1-2), the Court declines to decide the matter at this
time. Instead, in light of the parties&#39; willingness to
further discuss whether they could reach agreement on the
exchange of privilege logs on targeted subject matters, (Tr.
at 64-65, 70-71; D.I. 283 at 2-3), the Court ORDERS that by
no later than January 20, 2017, the parties
shall: (1) further meet and confer to see if they can resolve
the issue, if they have not already done so; and (2) submit a
...

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